Site Links

What happens to my 401k if I leave the country?

What happens to my 401k plan if I decide to leave the United States and move to another county? What are the consequences? How can I prevent from getting penalized? I am a 35-year-old permanent resident and have decided to move back to Canada.

Answer:

You can transfer your 401k to an IRA and the funds will be available to you when you reach retirement age to prevent you from getting hit with a penalty.

Check with your 401(k) plan administrator. Basically, the plan probably will hold the money for you or allow you to transfer the funds to a traditional IRA. You can also withdraw the money, but you will have to pay state and federal income taxes and a 10% penalty. The latter is the costliest of your choices.

You can roll it into an IRA and wait until retirement age and take it or you can take a distribution in cash. If you do so, make sure it happens BEFORE you move back to Indonesia as once you get that foreign address they are required to withhold 30%; instead of normal 20%.